Jump to content
Sign in to follow this  
sschullo

403(b) lawsuits hit a wall.

Recommended Posts

Of course, these lawsuits hit a wall! They are attacking a nonexistent problem. Higher education 403(b) plans are plans we dream about in our k12 world. We all know here that the REAL problem is 403(b)s in public k12 school districts! If the plaintiffs care to look, they will find massive and in-your-face conflicts of interest, extremely high costs, and aggressive sales practices right into the teacher's classroom during recess. The only thing that the sales force care about is a signature. That signature gets them a $1000 to a $4000 commission and then move on to the next classroom before recess is over. These annuity products are so complex that attorneys are hard-pressed to understand them, and finally, they produce the most pathetic returns ever recorded by the financial industry. 

https://www.investmentnews.com/article/20190109/FREE/190109944/have-403-b-lawsuits-hit-a-wall-fifth-university-wins-dismissal 

 

Share this post


Link to post
Share on other sites

If the plainiffs aren't finding their wins in higher ed 403(b) plans, what can be done to direct their attention to our k12 world? Or is the answer going to be NOTHING because of ERISA?

Share this post


Link to post
Share on other sites
21 hours ago, MoeMoney said:

If the plainiffs aren't finding their wins in higher ed 403(b) plans, what can be done to direct their attention to our k12 world? Or is the answer going to be NOTHING because of ERISA?

Hi Moe,

ERISA is not the problem. It's state insurance code laws. Annuity products and the sales force are regulated under state insurance commissions. California's law and about 5 other states regulations are especially egregious! But the problem is all over the country. 

We have new Insurance Commissioner here in California and I sent him and his staff the following letter with the NY Times stories, American Federation of teachers "Shark Attack" article my book and a similar letter written by an LAUSD benefits administrator. My letter explains the problem head on! 

We are asking for a meeting so that we might be able to introduce state legislation that begins to chip away at the abuses. 

January 14, 2019

The Honorable Ricardo Lara
California State Insurance Commissioner

Dear Commissioner Lara:

RE: Insurance Code 770.3 is a consumer nightmare

You won the election because in your words, “…my allegiance will always be first and foremost to the consumers….” Congratulations on your victory for yourself and for California consumers.

I wanted to bring to your attention to this obscure code, 770.3. This law is anti-consumer. 770.3 protects the insurance industry against the best interests of our state’s public K-12 educators. The annuity retirement products are overwhelmingly sold to our states’ teachers via each district’s defined contribution plan, 403(b). While almost all the other public sector employers can screen and pick vendors because of best practices and at reduced costs for their employees, the 1,181 California K-12 school districts cannot for fear of violating 770.3. The “any willing provider” model of 770.3 has had an iron-fist, and in my opinion, a negative presence, since annuities were first sold to teachers in 1961.

The anti-consumer claim is evidenced by the enclosed documents:

1.      New York Times 403(b) Articles

2.      Shark Attack by American Federation of Teachers

3.      A letter from Los Angeles Unified School District (LAUSD) benefit's administrator, George Tischler

         to your predecessor David Jones

4.      My book, Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN!

In addition to the above documents, over 35 newspaper and online articles reported the same problem repeatedly for 25 years--annuities are costly, inappropriate and yield pathetic returns for our teachers’ 403(b) plans. The annuity sales force is the only beneficiary. Our teachers are woefully unprotected from misleading, aggressive and self-conflicted financial sales pitches. The retirement planning universe has changed to fiduciary standards. While these sales “practices” are legal under 770.3, they are unethical, anti-consumer and not-at-all fiduciary. It’s time for reform.

Amending 770.3 to reform the 403(b) is your opportunity to show your “allegiance” to one group of consumers, California’s 933,410 public-school educators and their beneficiaries (data from our pension plan, California State Teachers’ Retirement System 06/30/17).

On the behalf of myself and my advocate colleagues Sandy, Scott, Barbara and Dan, we request a meeting with you or your staff to continue this conversation.

Once again, congratulations on your election! We look forward to meeting you.

Sincerely,

Steve Schullo, Ph. D. Retired LAUSD elementary teacher

 

LAUSD’s 403(b)/457(b) advisory committee member. Blogger and author of two books.

 

cc

Michael Martinez         Senior Deputy Commissioner & Legislative Director

Kendra Zoller        Deputy Legislative Director

 Jack Ehnes         Chief Executive Officer, California State Teachers Retirement System

 David Holmquist        Office of General Counsel, Los Angeles Unified School District

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×